Barroso boosts recession hit Europe with a 200 billion injection

It is billed as a short, sharp boost aimed at reviving the sagging European economy. European Commission President Jose Manuel Barroso has announced a 200 billion euro spending plan to help ward off the worst of the global recession.

The EU believes it is a potent package to combat the ongoing financial crisis.

The cash is equivalent to 1.5 percent of GDP, 1.2 percent from EU members and 0.3 percent from European Union funds and the European Investment Bank.

Jose Manuel Barroso had this to say: “We believe that a stimulus package of 1.5% is just about right. Less than 1%, in our opinion would not be enough. Our proposal is a measured response because it is realistic and can have positive knock-on effects.”

The proposal is the latest in a series of packages to counter the impact of a worldwide financial turmoil that has shut down access to funding, battered markets and shattered household and corporate confidence.

However, some are concerned that a dash for growth will inflate national deficits at precisely the wrong time.

It is essential that the construction and housing markets get moving again; both are closely linked to the credit market and account for a huge amount of consumer spending.

Carmakers will also get relief, further protecting jobs and export revenues, but investment capital released for them has strings attached, as the EU tries to encourage a greener industry.

Copyright © 2009 euronews

tags: Financial Crisis